Alternate Payment Models – Strategy Implications Of The CMS Roadmap

The federal Centers for Medicare and Medicaid Services (CMS) seems to be “all in” on alternate payment models (APMs). In total, more than 12.3 million Medicare and/or Medicaid beneficiaries in 2017 will be served by a clinical professional participating in an APM (see More Than 560 Medicare ACOs Will Participate In 2017).

What is an APM? CMS defines alternative payment models as “a payment approach that gives added incentive payments to provide high-quality and cost-efficient care. APMs can apply to a specific clinical condition, a care episode, or a population” (see What are Alternative Payment Models (APMs)?). Essentially, this is the CMS version of value-based reimbursement.

Comprehensive End-Stage Renal Disease (ESRD) Care (CEC) – On January 18, 2017, CMS announced that 37 accountable care organizations (ACO) were participating in CEC. The CEC Model is designed to identify, test, and evaluate new ways to improve care for Medicare beneficiaries with ESRD. In the CEC Model, dialysis clinics, nephrologists and other provider organizations join together to create an ESRD Seamless Care Organization (ESCO) to coordinate care for matched beneficiaries (see Medicare Launches 13 End Stage Renal Disease ACOs).

Oncology Care Model (OCM) – OCM went live on July 1, 2016, is a new oncology care model in which Medicare and other payers will pay the participating practices a monthly care management fee for each beneficiary over a six-month episode of chemotherapy, plus monthly fee-for-service (FFS) evaluation and management (E&M) services (see CMS Launches New Oncology Care Model Demonstration Project).

Comprehensive Care for Joint Replacement (CJR) Payment Model – On March 21, 2017, Medicare released an interim final rule delaying expansion and implementation of the bundled payment programs for joint replacements. Due to the change in presidential administration, CMS issued the interim final rule to delay the effective dates until May 20, 2017, and further delay the specific CJR regulations (see Medicare Delays Expansion, Implementation Of Bundled Payment Programs).

These programs may be just the beginning. CMS is developing a new APM for pediatric health care for provider organizations that serve children enrolled in Medicaid or a Children’s Health Insurance Program (CHIP) plan (see CMS Exploring New Pediatric Alternative Payment Models). In the Integrated Pediatric Service Model, CMS proposes sharing cost savings for successful performance, and it’s exploring financial arrangements that combine or coordinate funding that can allow for the streamlining of care for high-need and vulnerable children. While we don’t yet know what the models would look like, CMS’ “wish list” is telling — to integrate child and youth-focused health care services and health-related social services within partnerships of health care and social service provider organizations. No matter what the final form of those models looks like, I think that’s enough information for provider organization to begin their strategic discussions.

For executives of provider organizations serving consumers with complex needs, the CMS plans for APMs matter. It is those complex consumers that are the target of these initiatives to change reimbursement to both improve outcomes and reduce the use of unnecessary medical services. Why? There are about 8.9 million Medicare beneficiaries in ACOs – approximately 15% of the total Medicare population. Almost 3,000 primary care practices are moving to a new model, with new reimbursement and new referral patterns, courtesy of the CPC+ initiative. These new models for consumers with end-stage renal disease, cancer, and knee/hip replacements represent new markets for the behavioral health and social service organizations that can adapt their traditional services to the specific needs of these consumer niches. And, both the bundled rate initiative and the “next generation” ACO initiatives have liberalized use of telehealth and home care support services. Successful strategies for specialty provider organizations need to address the ‘fit’ in an emerging system of care – both in terms of “value” to the system and the operational relationship.

To improve your APM and VBR “IQ,” check out these resources in the OPEN MINDSIndustry Library:

For more on meeting these challenging value-based models, as well as value-based reimbursement in other forms, join me on June 7 for the session, “Preparing Specialty Provider Organizations For Value-Based Reimbursement: An Overview Of Competencies Required For Success” at The 2017 OPEN MINDS Strategy & Innovation Institute in New Orleans, featuring Ken Carr, senior associate, OPEN MINDS, and Robert (Carl) Clark, M.D., president & chief executive officer at the Mental Health Center of Denver.